U.S. App Economy Update - Dr. Michael Mandel May 2017 - Progressive Policy Institute
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U.S. APP ECONOMY UPDATE
U.S. App
Economy Update
Dr. Michael Mandel
May 2017
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U.S. APP ECONOMY UPDATE
About the author
Dr. Michael Mandel is chief economic strategist at the Progressive
Policy Institute (PPI) in Washington. Dr. Mandel is currently Senior
Fellow at the Mack Institute for Innovation Management at the
Wharton School at the University of Pennsylvania. Dr. Mandel
started two businesses: South Mountain Economics LLC, a
consulting firm focusing on emerging occupations and emerging
industries; and Visible Economy LLC, which produced news
and education videos for the college market. Dr. Mandel is the
author of four books, including The High Risk Society and Rational
Exuberance: Silencing the Enemies of Growth and Why the Future Is
Better Than You Think. His essentials-level economics textbook
from McGraw-Hill, Economics: The Basics, is into its third edition.
Dr. Mandel received a PhD in economics from Harvard University,
and taught at New York University’s Stern School of Business.
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U.S. APP ECONOMY UPDATE
MAY 2017
U.S. App Economy Update Dr. Michael Mandel
INTRODUCTION
When Apple introduced the While central bankers and national leaders
struggled with a deep financial crisis and
iPhone in 2007, that initiated stagnation, the fervent demand for smartphones
a profound and transformative was a rare force for growth. Today, there are
four billion smartphone subscriptions, an
new economic innovation.
unprecedented rate of adoption for a new
technology.1 Use of mobile data is rising at
55 percent per year, a stunning number that
shows its revolutionary impact.2
More than just hardware, the smartphone also
inaugurated a new era for software developers
around the world. Apple’s opening up of the App
Store in 2008, followed by Android Market (now
Google Play) and other app stores, created a way
for iOS and Android developers to write mobile
applications that could run on smartphones
anywhere.
The iPhone and the App Store were the
beginnings of a global App Economy: an army
of app developers writing mobile applications
for billions of users. For the most part, these
developers are not hobbyists writing games in
their basements. Instead, as more and more
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U.S. APP ECONOMY UPDATE
people are linked to the Internet through their monitor or control work processes. These apps
smartphone and mobile data connections, will be highly functional and sophisticated,
mobile apps have become an essential way serving an essential role in interacting with our
for businesses, nonprofits, and governments environment.
to interact with their customers, members, and
THIS PAPER
citizens. (Indeed, data shows that people spend
Building on previous work, this paper examines
most of their internet time interacting with
the number of jobs created by the App Economy
apps).
in the United States. Our first estimate of App
Use of mobile data is rising at Economy employment in the United States was
55 percent per year, a stunning issued in February 2012, based on fall 2011
number that shows its data.4 This figure of 466,000 was widely reported
revolutionary impact. in the media at the time.5 We then published
additional estimates in October 2012; July 2013,
Moreover, the long-term growth prospects of
which coincided with the fifth anniversary of
the App Economy are still strong. Yes, the great
the launch of the Apple App Store; and January
surge of new game, media, and ecommerce
2016.6
apps is probably close to its peak. However, the
rise of the Internet of Things means that more In this paper we update our most recent release,
and more objects and physical processes will and estimate that App Economy employment
be connected to the Internet. in the U.S. totaled 1.729 million as of December
2016 (Table 1). In other words, by our estimate,
Increasingly, individuals will be using mobile
the number of App Economy jobs in the United
apps as their interface to their home, travel,
States has nearly quadrupled over the past
entertainment, car, schools, health providers,
five years, growing at a 30 percent annual rate
and state and local governments. Employees
(Figure 1).
in many enterprises are using mobile apps to
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U.S. APP ECONOMY UPDATE
TABLE 1: The U.S. App Economy DECEMBER 2016
Total U.S. App Employment Average annual growth since fall 2011
1.729 million 30%
Jobs per year
Data: Progressive Policy Institute, Indeed, public job postings
FIGURE 1: U.S. App Economy Employment Over Time (thousands of jobs)
2,500
2,000
1,500
1,000
500
0
Oct 11 Oct 12 Oct 13 Oct 14 Oct 15 Oct 16
Trend line
Data: South Mountain Economics, Progressive Policy Institute, Indeed, The Conference Board
This stunning growth in App Economy In addition, this paper estimates the breakdown
employment roughly parallels the growth in the of App Economy employment by operating
number of iOS and Android apps, which have system, comparing the number of jobs in the
more than quadrupled over the same period. iOS ecosystem with the number of jobs in
Meanwhile, consumers spend vastly more time the Android ecosystem. Finally, we provide a
on their smartphone apps today than they did ranking of the top 25 App Economy states in the
in 2011. country, starting with California, New York, and
Texas at the top, with states such as Missouri,
Tennessee, Wisconsin, Indiana, and Utah.
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U.S. APP ECONOMY UPDATE
CONTEXT that count exports have no category in trade
In this paper we focus on App Economy statistics for the revenues generated by the
employment in the United States. However, export of domestically-created apps to other
this paper is part of a larger research project countries, even though these revenues may be
examining App Economy employment in very significant. Indeed, statisticians may not be
different countries and regions, including the counting these exports at all.8
European Union, Japan, Australia, Mexico,
The App Economy, because it
Argentina, Colombia, Vietnam, Indonesia,
doesn’t fit neatly into the old
and China.
economic paradigms, is particularly
There are several reasons we have focused on hard for traditional government
App Economy jobs. First, the invention of the statistics to measure.
smartphone was one of the two most important
The other reason we have focused on App
technological innovations over the past decade,
Economy employment has to do with the
from the perspective of economic impact, so
broad ongoing debate about the link between
it’s natural to want to know how many jobs it is
technological innovation and jobs. There’s a
creating.7 These are not numbers that can be
pervasive worry, especially in the aftermath
found in government statistics, which typically
of the financial crisis, that new technologies
have trouble capturing the impact of new
destroy jobs without creating very many
technologies.
new ones.9 So we see reputable business
The App Economy, because it doesn’t fit neatly publications like Fortune and the Wall Street
into the old economic paradigms, is particularly Journal run articles with titles like “Silicon
hard for traditional government statistics to Valley Is Not a Job Creator” and “Wireless Jobs
measure. For example, statistical agencies Evaporate Even As Industry Expands.”10,11
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Unfortunately, government economic statistics makers in Hanoi, or Berlin, or Washington can’t
are much better at tracking the reduction of make the right decisions.
existing jobs than identifying the growth of
MEASURING THE APP ECONOMY
new types of jobs. For reasons of both budget
The economic impact of the App Economy
limitations and inertia, it takes years for new
can be characterized by various metrics. One
occupations to get their own categories in
important metric is the total revenue flowing
the employment statistics, if it ever happens
through the various app stores, both globally
at all. For example, the term “Web developer”
and nationally. One report pegs global app
was only added to the Standard Occupational
revenues at $45 billion in 2016, with the Asia-
Classification in 2010. However, the term was
Pacific market accounting for 56 percent of
in common use at least as early as 1995, when
that.13 A related metric is the revenue per app,
visitors to the official White House Web page
which measures the value to developers. By
were invited to send emails “to the White House
some reports, “the average iOS download now
Web developers and maintainers.“12
generates four times the revenue for developers
This lack of data made it harder to measure compared to Google Play.”14
the employment impact of the Internet and the
However, the revenue metric, while important, far
New Economy. Equally important, without being
understates the full economic impact of the App
able to track new jobs, it’s impossible to figure
Economy. Many heavily-used apps from non-
out if policies are succeeding or failing. Without
game companies, nonprofits, and governments
data—specifically data about the contribution of
are free to download and have no in-app
the App Economy to individual countries—policy
purchases, meaning they generate no revenues
on an app store. For example, Facebook
Messenger has 1 billion users worldwide,
according to Facebook. But, as a free app, it
generates no revenue through the App Store or
Google Play. Similarly, visitors to Washington,
D.C., can download a variety of free apps that
help in navigating the local transit system.
These apps generally provide no revenue, but
do provide benefits for their users.
Moreover, the revenue numbers for the app
stores tell you where apps are generating
revenue, but not where they are produced. Most
game developers have operations around the
world. For example, Gameloft—a company
that makes games for iOS, Android and other
platforms—is headquartered in Paris. However, it
has offices in 18 countries and was advertising
in October 2016 for game designers in locations
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such as Mexicali (Mexico), Lviv (Ukraine), and
Da Nang (Vietnam). The Da Nang location was
established in 2010 and now has almost 500
employees. It would be misleading to attribute all
of Gameloft’s app revenue to France.15 Similarly,
a non-tech company like Walmart or BMW that
offers an app may develop it internally, or hire an
app developer anywhere around the world.
The Da Nang location was
established in 2010 and now
has almost 500 employees.
For these reasons, we have chosen to use
employment as our preferred metric for
measuring the economic impact of the App and standardized the original methodology so it
Economy. Our methodology (described in the could be applied to a wide variety of countries,
Appendix) is based on analyzing databases of languages, and economic environments. Our
online job postings. These job postings typically goal was to produce a set of globally-consistent
contain information about the skills required and credible estimates for App Economy
for the job and the location of the job. We are employment by individual countries, broad
then able to search for jobs that require App geographical regions, and, where possible, by
Economy-related skills, such as knowledge of the largest cities.
iOS or Android. In this way we can develop an
DEFINING THE APP ECONOMY
estimate of App Economy jobs by country
For this study, a worker is in the App Economy if
and region.
he or she is in:
This methodology uses what is known as
• An IT-related job that uses App Economy
“organic data.” As opposed to economic data
skills—the ability to develop, maintain, or
collected by government statisticians using
support mobile applications. We will call
special surveys, organic data is generated by
this a “core” app economy job. Core app
organizations in the course of doing normal
economy jobs include app developers;
business. For example, economists have
software engineers whose work requires
successfully used the prices posted by retailers
knowledge of mobile applications; security
on their websites to estimate the inflation rate
engineers who help keep mobile apps safe
without the need to do the usual monthly survey
from being hacked; and help desk workers
of businesses.16
who support use of mobile apps.
Our methodology for using online job postings
• A non-IT job (such as sales, marketing,
to estimate the size of the App Economy was
finance, human resources, or administrative
originally introduced in 2012, in a widely-quoted
staff) that supports core app economy jobs
paper that reported the first estimate of U.S. App
in the same enterprise. We will call this an
Economy jobs.17 In December 2015 we extended
“indirect” app economy job.
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• A job in the local economy that is supported Airlines and other transportation companies
either by the goods and services purchased cannot afford to be without apps these days.
by the enterprise, or by the income flowing Neither can automakers such as GM and Ford,
to core and indirect app economy workers. who are hiring app developers at a rapid pace
These “spillover” jobs include local to help them gain a foothold in the market for
professional services such as bank tellers, connected cars. Indeed, Michigan has almost
law offices, and building managers; telecom, as many job openings for app developers these
electric, and cable installers and maintainers; days as for machinists.18 And of course, the
education, recreation, lodging, and restaurant military and intelligence agencies are big hirers
jobs; and all the other necessary services. of App Economy talent.
We use a conservative estimate of the
Both startups and large companies are creating
indirect and spillover effects, as discussed
App Economy jobs at a rapid pace. For example,
in the Appendix.
as of April 2017, Pager, a health tech startup
EXAMPLES OF APP ECONOMY JOBS in New York City, was looking for a senior IOS
Core App Economy Jobs software engineer. Foursquare, founded in 2009,
App Economy workers are widely distributed was looking for an Android and an iOS engineer
across the U.S. economy, both geographically in New York as well. In Ann Arbor, Interaction
and in terms of industries. Of course, top Gaming, founded in 2016, was looking for an IOS
tech firms such as Apple, Google, Amazon mobile developer to help with mobile apps for
and Facebook hire hundreds of workers with the lottery industry.
expertise in building and maintaining mobile
At the other end of the size scale, Verizon
applications and the underlying infrastructure.
posted a position for a Senior iOS Developer in
Mobile game companies, too, need developers
Alpharetta, Georgia. Allstate, the giant insurance
with a deep knowledge of iOS and Android.
company, was hiring for a senior iOS developer
But those jobs are just the very tip of the iceberg. in Northbrook, Illinois. Charter Communications
The App Economy has steadily expanded. was looking for an Android Mobile Application
Retailers such as Target, Walmart and Best Developer in St. Louis, MO. JP Morgan Chase
Buy use apps as an essential channel for was posting for a Mobile Application QA
reaching consumers. Media and entertainment Developer in Columbus, Ohio.
companies such as Disney and ESPN develop
Media and retail companies need high-quality
apps to deliver content right to consumers.
mobile apps in order to survive. As of April
Financial companies such as JPMorgan
2017, Target was looking for a senior Android
Chase and Bank of America develop apps
engineer in Brooklyn Park, Minnesota, outside
as an essential part to their strategy to offer
of Minneapolis. Showtime was looking for an
new services and to wean consumers and
iOS/tvOS Developer in New York City. In Austin,
businesses away from expensive bank branches.
Texas, Cox Automotive, which owns brands
Moreover, these apps have to be continually
such as Kelley Blue Book and Autotrader, was
maintained and updated by app developers to
looking for a senior mobile software engineer
keep them secure.
to build iOS apps. Rue La La, a Boston-based
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ecommerce leader, was looking for a senior iOS is the application of information technology .
developer. Papa John’s, the national pizza chain, As of April 2017, John Deere was looking for a
was looking for an iOS developer in Louisville, mobile application developer in Urbandale, Iowa,
KY, who was willing to tackle new devices such outside of Des Moines. DuPont Pioneer was
as connected vehicles and wearables. New looking for a mobile architect in Johnston, Iowa.
Balance was posting for a mobile architect Cricut, a maker of personal electronic cutting
to join its ecommerce division in St. Louis, machines, was posting for a Senior Android
Missouri. Mobile Engineer in South Jordan, Utah. Emerson,
a Fortune 500 company, was looking for a senior
The federal government, the Department of
engineer experienced with iOS and Android to
Defense and intelligence agencies are also major
join its operations in St. Louis, MO. ForeFlight ,
sources of demand for App Economy jobs.
which produces apps for pilots and operators,
For example, as of April 2017, Ball Aerospace
was looking for an iOS mapping developer
was looking for a “Software Developer-Mobile
in Portland Maine. Of course, as the posting
Apps” in Dayton Ohio who was able to get a
suggested, “a pilot-coder, or individual looking to
Department of Defense security clearance. And
pursue his or her private pilot license, is a plus.”
the NSA, of course, was advertising for a mobile
applications developer who would contribute The App Economy is becoming a crucial part
to both “Computer Network Defense” and of security and support. In April 2017, Ernst
“Computer Network Exploitation.” & Young was searching for a senior security
consultant for mobile and infrastructure,
Probably the fastest growing sector of the
based out of Alpharetta, GA. Yudrio was
App Economy is the Internet of Things, which
looking for a Mobile Device Security Analyst
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in Reston, Virginia. And Bluegrass Cellular, consistent with an assumption that each App
in Elizabethtown, Kentucky, was looking for a Economy job created adds another job at the
helpdesk support coordinator with “exceptional same enterprise.
knowledge” of Android and Apple email and
When we examine the distribution
browsing systems.
of occupations in software-related
Social and religious organizations are investing industries, we find that employees
in mobile apps as well. OkCupid, the dating in computer and statistical
website, was looking to hire a Senior iOS occupations represent roughly
Engineer in New York City to help attract more half the workforce.19
daters. Life.Church in Edmond, Oklahoma, was
Spillover Jobs
looking for an iOS software engineer to help
How much impact does the creation of a core
build and maintain bible apps.
App Economy job have on the broader economy?
And then of course the auto industry has This is a very important question, since we
embraced the connected car with a vengeance. want to know whether the benefits of the
Ford Motor Company was looking for “innovative App Economy spread out to the parts of
and highly skilled iOS Mobile Development the workforce that are not necessarily
Engineers” to join its Advanced Mobile/ technically trained.
Embedded Apps team in Dearborn, Michigan.
Typically, economists who study economic
Meanwhile Systems Technology Group was
development distinguish between Type 1 and
hiring for fifty available positions for iOS or
Type 2 “multiplier effects.” Type 1 multiplier
Android developers for a “large Fortune 500
effects refer to the additional jobs created by
Automotive firm” in Michigan. This is the wave of
increased purchases by the enterprise hiring
the future.
the App Economy worker. Type 2 multiplier
Indirect App Economy Jobs effects refer to the additional jobs created
App developers do not work in a vacuum. because the newly hired App Economy worker
Other workers at the same enterprise generally is spending more in the area. So, if a mobile
support them. These positions include the sales game development firm purchases additional
and marketing staff; human resources, financial services and goods from local law firms and
and legal professionals; and the office and office suppliers, that’s a Type 1 multiplier. If the
administrative staff. game company’s workers go home and make
appointments to have dental work at the local
When we examine the distribution of
dentist, that’s a Type 2 multiplier.
occupations in software-related industries,
we find that employees in computer and A review of the existing literature, including the
statistical occupations represent roughly employment requirements tables put together
half the workforce.19 In other ways, each tech by the Bureau of Labor Statistics, suggests that
occupation job in an enterprise is associated the Type 1 multiplier effect from an additional
with roughly one other non-tech job. We use that job at a software company is likely to have a
as our multiplier for indirect App Economy jobs broad impact across the whole service sector.20
within an enterprise. In other words, the data is That means more jobs at local healthcare and
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education institutions, professional services done for Alliance of Automobile Manufacturer,
firms, building management, entertainment, estimated that every new job in the automobile
culture, financial institutions, real estate, industry generated 3.7 additional jobs in the rest
retailers, hotels, and restaurants. So we would of the economy.21 Another analyst estimated
expect a broad increase in service sector that each job in the software publishing industry
employment as a spillover effect from the generated 3.3 jobs in rest of the economy.22
expansion of the App Economy, including a However, our use of a low multiplier increases
wide range of occupations. That might include our confidence in the final result.
demand for additional commercial real estate
RESULTS
brokers, for example, as growing companies
We estimate that total App Economy employment
need more space.
in the United States was 1.729 million as
We want to be conservative about the size of of December 2016. This includes core App
the spillover multiplier for the purposes of this Economy jobs, indirect App Economy jobs,
paper. Therefore, we assume that each core App and a conservative estimate of spillover jobs.
Economy job generates one indirect job in the Because of the nature of the methodology,
same enterprise and one spillover job in the rest the figure does not include hobbyists or the
of the economy, with the benefits accruing to a smallest companies.
wide range of occupations.
Our assumptions for the size of the spillover
effect are quite conservative. For example, the
Center for Automotive Research, in a study
TABLE 2: Estimates of App Economy Jobs over Time
DATE OF ESTIMATE DATE OF PUBLICATION APP ECONOMY JOBS, THOUSANDS
FALL 2011 FEBRUARY 2012 466
APRIL 2012 OCTOBER 2012 519
JUNE 2013 JULY 2013 752
DECEMBER 2015 JANUARY 2016 1,660
DECEMBER 2016 MAY 2017 1,729
Data: South Mountain Economics, Progressive Policy Institute, The Conference Board, Indeed, BLS
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Note that, over the past five years, App Economy five-year growth rate for all occupations is 1.6
jobs have grown at an annual rate of roughly 30 percent. Employment in management and
percent. This growth rate in App Economy jobs is professional occupations has risen at a 2.5
roughly in the same ballpark as other measures percent rate, with the number of people working
of app growth, such as the number of apps in in computer and mathematical occupations
the various app stores and consumer usage rising at a 4.9 percent rate.
of apps. For example, from the fourth quarter
Employment in management and
of 2012 to the fourth quarter of 2014, Nielsen
professional occupations has
reports that time spent on apps increased at an
risen at a 2.5 percent rate, with
average annual rate of 28 percent.23
the number of people working
Note that, over the past five years, in computer and mathematical
App Economy jobs have grown occupations rising at a 4.9
at an annual rate of roughly percent rate.
30 percent.
In other words, the App Economy is one of the
To see just how far the App Economy has most dynamic parts of the economy in terms
outperformed the rest of the economy, just of adding jobs, but conventional statistics don’t
take a look at Table 3. We see that the average pick up these gains.
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TABLE 3: Five-year growth rate of employment, Fall 2011-Fall 2016
5-YEAR GROWTH RATE
ALL OCCUPATIONS 1.6%
MANAGEMENT AND PROFESSIONAL OCCUPATIONS 2.5%
COMPUTER AND MATHEMATICAL OCCUPATIONS 4.9%
APP ECONOMY JOBS 30.0%
Data: BLS, Progressive Policy Institute
OPERATING SYSTEM
The two major smartphone operating systems to either the iOS ecosystem or the Android
today are iOS and Android. Employers looking for ecosystem, or both.24
App developers often specify in which operating Table 4 shows the distribution of App Economy
system or systems they want their hires to jobs by mobile operating system.
have expertise. This enables us to assign jobs
TABLE 4: App Economy Jobs by Operating System
DECEMBER 2016 (THOUSANDS)
ALL APP ECONOMY JOBS 1,729
iOS ECOSYSTEM 1,530
ANDROID ECOSYSTEM 1,353
Data: Progressive Policy Institute
Note that the iOS and Android numbers add up to more than the total, because many App Economy jobs belong to both ecosystems.
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LOCATION
Generally, job postings have to contain the Table 5 below lists the top 25 App Economy
location of the position. In particular, we can states, along with the number of App Economy
identify the state where the position is located. workers.
TABLE 5: The Top 25 App Economy States, December 2016
THOUSANDS OF JOBS THOUSANDS OF JOBS
01 CALIFORNIA 419.1 14 NORTH CAROLINA 37.9
02 NEW YORK 135.6 15 MINNESOTA 37.7
03 TEXAS 118.6 16 MARYLAND 36.5
04 WASHINGTON 91.6 17 COLORADO 31.8
05 MASSACHUSETTS 73.6 18 ARIZONA 24.7
06 ILLINOIS 72.3 19 DISTRICT OF COLUMBIA 24.2
07 VIRGINIA 67.0 20 OREGON 21.9
08 FLORIDA 65.8 21 MISSOURI 18.5
09 GEORGIA 51.0 22 TENNESSEE 18.0
10 NEW JERSEY 47.7 23 WISCONSIN 17.6
11 PENNSYLVANIA 46.1 24 INDIANA 17.1
12 OHIO 45.9 25 UTAH 15.6
13 MICHIGAN 39.2
Data: Progressive Policy Institute
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We note that the order of this table is very some spurious jobs. Washington has jumped
similar to the table we published in January from #10 a year ago to #4, most likely on the
2016.25 California, New York, and Texas are strength of Amazon’s hiring of App Economy
still at the top of the list, although New York’s workers. Finally, note the large number of
number is somewhat lower because we made Midwestern states in the top 25.
a slight tweak to the methodology to eliminate
CONCLUSION
There’s an ongoing debate about whether the are distributed across the country and across
tech boom is generating enough jobs, and what industries.
kind. This debate has been hindered, in part,
Apple released the first iPhone in
by a lack of good data. The categories used by
2007—there are now more than 1.7
government statisticians to track tech industries
million jobs in the App Economy.
are too old to correctly pick up the growth in
tech-related activities. These results directly address the question
of job creation by the tech sector. Indeed,
In this paper we have focused on one important
we see that the investments tech and telecom
slice of the tech boom: the jobs related to the
companies have made in the operating
development, maintenance, and support of
systems for smartphones, in the hardware
mobile applications. We showed that starting
for smartphones, and in the mobile networks
from nothing in 2007—before Apple released the
have paid off with job growth, not just in the
first iPhone—there are now more than 1.7 million
US, but around the world.
jobs in the App Economy. Moreover, these jobs
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Methodology Appendix
Even today, most studies of job creation rely on In practice, we compiled a short list of key words
government-generated survey data. To estimate and phrases that would generally be associated
the size of App Economy employment, however, with App Economy-related skills. These included
requires an innovative methodology based on iOS, Android, Blackberry, Windows Phone,
“organic data.” Organic data is generated by Windows Mobile, and app. We applied these
organizations in the normal course of doing search terms to the real-time database of job
business. In the past, organic data was not postings developed by Indeed, which gave us
easily accessible to analysts. However, much an unadjusted count of job postings for core
more data is available on a consistent basis. App Economy jobs.
Our methodology for estimating the number of However, that’s only the start. Job postings
App Economy jobs uses the continually updated for an occupation are only a fraction of the
database of online job postings put together by number of people employed in that occupation,
Indeed.com. Indeed bills itself as “the world’s since most positions are not empty.27 We
#1 job site, with over 200 million unique visitors develop an estimate for the ratio between
every month from over 60 different countries.”26 the number of job postings for tech jobs and
Using Indeed, we can search for online job overall tech employment.28 This ratio is applied
postings containing specific key words and to the number of App Economy job postings
phrases. to generate a provisional estimate of core App
Economy employment. Crucially, we used a
In this Appendix, we will describe how the
validation procedure to ensure we are actually
baseline December 2015 estimate (published
counting job postings that correspond to core
January 2016) was calculated. Then we will
App Economy jobs.
describe how the December 2016 update was
constructed. How do we tell which jobs require App Economy
skills? The key is to look at help wanted ads—
DECEMBER 2015 BASELINE ESTIMATE
also called job postings—where enterprises
To estimate the number of core App Economy
actually describe the skills and knowledge
jobs in December 2015, we used a multi-step
they are looking for. The heart of the analysis
procedure based on data from the universe of
is the list of key words and phrases generally
online job postings. Our first observation is that
associated with App Economy-related skills.
online job postings typically describe the skills
In previous studies we have built up extended
and knowledge being sought by the employer.
keyword lists. However, because we intend this
For example, if a job posting requires that the job
analysis to be repeatable across a wide range of
candidate have experience developing apps for
countries, we simplified the search terms.
iOS—the iPhone/iPad operating system—then
we can reasonably conclude the posting refers
to a core App Economy job.
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THE METHODOLOGY CONSISTED OF SEVEN DISTINCT STEPS.
1. Identification of App Economy job postings 4. Estimation of App Economy core jobs
Using summary statistics generated by searches for the United States
on indeed.com, we identified job postings ads We multiplied the ratio generated in Step 3
for App Economy jobs containing one of the and the validated number of App Economy job
following key words: iOS, Android, Blackberry, postings generated in Step 2. The result gave us
Windows Phone, Windows Mobile and app. the estimate of core App Economy jobs for the
United States in December 2015.
2. Validation
Invariably, some job postings identified in Step 5. Estimation of total App Economy
1 will not fit the criteria of an App Economy employment for the United States
worker (e.g. a job posting for a truck driver using Using the same multipliers as in our previous
an app). We therefore validated the sample work, we estimated the total number of App
by manually examining a sample of the job Economy jobs in the United States. We assumed
postings from Step 1 to eliminate those that do that each core App Economy job is supported
not fit our criteria of an App Economy worker. by one job-equivalent at the same company (e.g.
This allows us to estimate a validation ratio that managers, human resources, accounting). Then
we applied to the results of Step 1. we assume that each company job generates
one job in the rest of the economy. This is a very
3. Identification of IT job postings in the
conservative assumption for spillovers.
United States, and estimation of the ratio
of job postings to employment for overall IT 6. Estimation of the total employment in the
occupations iOS and Android ecosystems in the United
We constructed a keyword list to identify job States
postings for IT occupations in the U.S. This Out of the set of job postings containing the
included a core list of English words and terms “iOS” or “Android”, we identified the
phrases commonly found in job postings for share that contain terms belonging to the iOS
IT occupations (such as “java” and “database” ecosystem (Apple, iPad, iPhone, iOS) and the
and “app”). share belonging to the Android ecosystem
(Android, Google). Then those shares were
We then validated the outcome using the same
applied to all App Economy employment.
methodology as Step 2, manually examining
a sample of job postings to assess which 7. Estimation of App Economy employment
actually correspond to IT occupations. Then by states
the resulting number was used to estimate the The Indeed database enabled us to identify App
ratio of job postings to employment for overall IT Economy job postings by state. We therefore
occupations. could rank states by App Economy employment.
P18U.S. APP ECONOMY UPDATE
DECEMBER 2016 UPDATE
Organic data, such as online job postings, companies. If a new job board opens up, that
are produced by organizations in their has the potential to increase the count of
normal course of business. As such, these reported job postings, even though nothing
organizations have an incentive to make sure fundamental has changed in the labor market.
their data reflects the realities of the economy
As a result, tracing organic data over time
as soon as possible. That means organic
can be misleading unless appropriate care is
data are continuously improving, making
taken. In this case, we will use the “job trends”
them a wonderful tool for studying emerging
data produced by Indeed, which, for any set of
occupations. By contrast, it can take a decade
keywords, gives a consistent estimate over time
or more for government statisticians to update
of the share of job postings fitting those criteria
the official statistical categories to match the
compared to all job postings.29
realities of the economy.
We then use the job trends data to estimate
But there’s a downside to this business-driven
the percentage increase in the total number of
urge for improvement: The organizations that
core App Economy jobs over time, as well as
generate the data have no incentive to keep
the percentage increase in the size of the iOS
it consistent over time. Quite the contrary,
and Android ecosystems. We then apply those
if organizations see a way of changing or
percentage increases to the December 2015
rearranging their data to better improve its
App Economy estimates in order to derive the
usefulness for customers, they will do that, even
December 2016 estimates. In other words, we
if it breaks the statistical continuity over time.
estimate the rate of growth, and then use that
For example, a job site such as Indeed rate of growth to estimate the level a year later.
collects its data from multiple job boards and
P19U.S. APP ECONOMY UPDATE
Notes
1 “Ericsson Mobility Report: Interim Update,” February 2017, https://www.ericsson.com/res/docs/2016/mobility-report/emr-interim-
february-2017.pdf
2 Ibid
3 The term “App Economy” was being used as early as 2009, in a BusinessWeek cover story “Inside the App Economy,”
(October 22, 2009). http://www.bloomberg.com/news/articles/2009-10-22/inside-the-app-economy
4 Michael Mandel, “Where the Jobs Are: The App Economy,” (February 2012). http://www.technet.org/wp-content/uploads/2012/02/
TechNet-App-Economy-Jobs-Study.pdf
5 For example, “The ‘App Economy’ Estimated to Contribute Nearly Half a Million Jobs to the U.S.,” Time (2/8/12) http://business.time.
com/2012/02/08/the-app-economy-estimated-to-contribute-nearly-half-a-million-jobs-to-the-u-s/, and “Angry Birds Boom
Spurs U.S. Job Revival on Mobile Demand,” Bloomberg, (3/5/12). https://www.bloomberg.com/news/articles/2012-03-05/angry-birds-
boom-spurs-u-s-employment-revival-on-mobile-software-demand
6 Michael Mandel and Judith Scherer, “The Geography of the App Economy,” (October 2012). https://southmountaineconomics.files.
wordpress.com/2012/11/the_geography_of_the_app_economy-f.pdf
“752,000 App Economy jobs on the 5th anniversary of the App Store,” (July 2013). http://www.economicmodeling.com/2012/08/31/
job-multipliers-silicon-valley-vs-the-motor-city/
7 See “Economic Revival and the Unpredictability of Technological Innovation,” July 6, 2016,
http://www.progressivepolicy.org/issues/economy/local-economic-revival-unpredictability-technological-innovation/
8 See Michael Mandel, “Data, Trade, and Growth,” Progressive Policy Institute, April 2014.
http://www.progressivepolicy.org/slider/data-trade-and-growth/
9 See, for example, “The Onrushing Wave: Previous technological innovation has always delivered more long-run employment, not less.
But things can change,” The Economist, January 28, 2014. http://www.economist.com/news/briefing/21594264-previous-
technological-innovation-has-always-delivered-more-long-run-employment-not-less
10 “Silicon Valley Is Not a Job Creator,” Fortune, December 4, 2015. http://fortune.com/2015/12/04/silicon-valley-is-not-a-job-creator/
11 “Wireless Jobs Evaporate Even as Industry Expands,” Wall Street Journal, July 17, 2011. See my analysis at
https://innovationandgrowth.wordpress.com/2011/07/24/misinterpreting-data-how-the-wsj-got-the-wireless-jobs-story-wrong/
12 White House, (1995). “Send mail to the developers,”
https://clinton1.nara.gov/White_House/Mail/html/Mail_Developers.html, downloaded November 3, 2016.
13 “App revenue to hit $81B by 2020,” Mobile World Live, October 6, 2016.
http://www.mobileworldlive.com/apps/news-apps/app-revenues-to-hit-81b-by-2020/
14 “Apple’s iOS App Store now generating 4x revenues per app vs Android Google Play,” AppleInsider, July 19, 2016.
http://appleinsider.com/articles/16/07/19/apples-ios-app-store-now-generating-4x-revenues-per-app-vs-android-google-play
P20U.S. APP ECONOMY UPDATE
15 Unfortunately, it is common for analysts to attribute all economic benefits of app development to the home country of the app
developer. For example, a 2016 report, “Winners & Losers in the Global App Economy” (Caribou Digital) tried to identify flows of app-
related trade by looking at a large sample of top apps in each market, and then identifying the city and country location for the
developer. However, they explicitly assumed that, “for larger firms with multiple offices, the headquarters location was selected“ as
the location of production (Page 15). This assumption is like treating all of GE’s $120 billion in global revenues as if it was produced in
Connecticut, simply because that is where the company is headquartered.
16 Rigobon, R. and Cavallo, A., (2016) “The Billion Prices Project: Using Online Prices for Inflation Measurement and Research,” Journal of
Economic Perspectives, Vol 30(2):151-78.
17 Michael Mandel, “The App Economy: Where the Jobs Are,” February 2012, South Mountain Economics LLC.
18 As of the end of April 2017, there were roughly 290 job postings in Michigan that contained the words “mobile”, “iOS”, or “Android”
in their title. At the same time, there were roughly 350 job postings with the word “machinist” in their title.
19 In particular, we looked at the distribution of occupations in NAICS codes 5415, 5112, and 519. See index here
https://www.bls.gov/oes/current/oessrci.htm#54
20 The employment requirements tables of the BLS show “the employment generated directly and indirectly across all industries by a
million dollars production of a given industry’s primary product.” https://www.bls.gov/emp/ep_data_emp_requirements.htm
21 Center for Automotive Research, 2015, “Contribution of the Automotive Industry to the Economies of All Fifty States and the United
States”
22 See, for example, EMSI, “Job Multipliers: Silicon Valley vs. The Motor City,“ August 31, 2012,
http://www.economicmodeling.com/2012/08/31/job-multipliers-silicon-valley-vs-the-motor-city/
23 “So Many Apps, So Much More Time For Entertainment,” Nielsen (June 11, 2015). http://www.nielsen.com/us/en/insights/news/2015/
so-many-apps-so-much-more-time-for-entertainment.html
24 Adding in the Blackberry and Windows Mobile operating systems does not change the result significantly.
25 http://www.progressivepolicy.org/blog/app-economy-jobs-part-2/
26 https://www.indeed.com/about We thank Indeed for the use of the data it collects. Indeed bears no responsibility for the content in this
paper.
27 For example, the Indeed database, as of late December 2015, contained roughly 390,000 job postings for the search “’registered nurse’
or RN”. That’s compared to an estimated employment of 3 million registered nurses, for a ratio of one job posting for roughly every
eight jobs.
28 The ratio in the U.S. was roughly one tech job posting for every nine tech jobs in 2015. Our work shows that this ratio varies by country,
as one would expect. In addition, this ratio would vary by broad occupation, depending on the hiring practices in that occupation.
29 https://www.indeed.com/jobtrends
P21U.S. APP ECONOMY UPDATE
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